The descent of pandemic-era stars has been nothing short of brutal and Shopify (STORE) could be the perfect example of this 180 degree pivot in market trends.
With a third of the year behind us, more than two-thirds of the stock’s valuation disappeared into the ether as investors turned away en masse spooked by macro trends and disappointing 4Q21 results indicating that the pandemic e-commerce party was well and truly over. Additionally, the company offered a bleak outlook, with growth expected to slow a little further.
With that as a backdrop, it will be interesting to see if Shopify can regain momentum or if more slumps await when the company releases its first quarter results on May 5.
For those who fear more pain, perhaps a positive indicator can offer a ray of hope.
Watch website traffic trends, unique visitors (UVs) increased sequentially by 32%, from 162.28 million to 213.94 million. Best of all, the year-over-year growth is extremely impressive: up 160%.
Ahead of print, RBC’s Paul Treiber estimates that Shopify’s gross merchandise volume “continued to grow faster than the industry” and is expected to grow 22% y/y.
As such, Treiber expects first-quarter revenue of $1.24 billion, up 26% from the same period last year. The figure is also in line with the consensus estimate. However, given the current unstable macroeconomic climate, Treiber says concerns over the “resilience of consumer spending could weigh on growth expectations in 2H/CY22.”
From an investment perspective, while Treiber warns that Shopify shares are “likely to remain volatile in the near term,” he still fully backs the name. “We think Shopify is one of the most compelling long-term growth stories in our coverage,” the 5-star analyst summed up.
Therefore, Treiber assesses that SHOP shares an outperformance with a price target of $1,000. The figure implies that the shares will be valued 125% more in a year. (To see Treiber’s track record, Click here)
What does the rest of the street think? Opinions are also divided; the stock’s moderate buy consensus rating is based on 14 buys and takes, each. However, virtually everyone considers stocks undervalued right now; the average target of $957.63 leaves room for a 116% upside over 12 months. (See Shopify’s inventory forecast on TipRanks)
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Disclaimer: Opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.